Sugar #11 May '19 (SBK19)
Sugar #11 Futures Market News and Commentary
Mar NY world sugar #11 (SBH20) on Tuesday closed up +0.07 (+0.56%), and Dec ICE London white sugar #5 (SWZ19) closed up +2.40 (+0.70%). Sugar prices settled higher Tuesday as a weaker dollar sparked short-covering in most commodities, including sugar. Sugar prices were undercut by weakness in the Brazilian real, which fell sharply by -0.8% to a 1-1/2 week low against the dollar Tuesday and encouraged export selling by Brazil's sugar producers. Sugar found support on Monday's news that China's Commerce Ministry is now allowing private firms to apply for low-tariff sugar import quotas allocated to state-owned companies, which may boost Chinese import demand for sugar. China left its 2020 sugar import quota unchanged from 2019 at 1.945 MMT with 70% allocated to state-owned firms. Last Wednesday's sugarcane crushing data from Brazil's Center-South, the country's biggest sugar-producing region, was supportive for sugar prices after Unica reported that 35.1 MMT of total sugarcane was crushed in the second half of Sep, below expectations of 36.2 MMT. Also, Unica reported that total 2019/20 Brazil Center-South sugar output through Sep fell -2.4% y/y to 21.8 MMT. Unica projects that increased ethanol output in Brazil will cut Brazil 2019/20 Center-South sugar production by -5.7% y/y to a 14-year low of 25 MMT. Dec London sugar posted a 7-1/4 month nearest-futures high Oct 4 and Mar NY sugar rose to a 1-3/4 month high Oct 2 on the outlook for smaller future sugar supplies. Green Pool Commodity Specialists Oct 2y raised their 2019/20 global sugar deficit estimate to 5.3 MMT from an Aug estimate of -3.8 MMT. JPMorgan Sep 30 raised its 2019/20 global sugar deficit to -6.4 MMT, more than double a June projection for a -3.0 MMT global sugar deficit. JPMorgan also said sugar "is transitioning into a longer-term deficit phase" and projects that a global 2020/21 global sugar deficit will be a minimum -7.0 MMT. Dry conditions in Thailand, the world's fourth-largest sugar producer, are supportive for sugar prices after Maxar said Oct 1 that two-thirds of Thailand's sugar-growing regions received only 40% of average rain in the past month, which has stunted cane growth.
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COTTON General Comments: Cotton was higher in reaction to talk that the US and China were close to a partial deal that would allow [...]